Can A Secured Credit Card Raise Your Credit Score

By Author: Alisdair Cosgrove
Total Articles: 184
Comment this article

By using an unsecured credit card, you have a simple and convenient way to build your credit history because it does not require any form of collateral. However, if you happen to have poor or bad credit, it may be almost impossible to obtain approval for an unsecured credit card.

If this is the case, there are other options to consider, such as a secured credit card. Secured credit cards differ from unsecured ones in that they require collateral in the form of a cash deposit, which is placed in a savings account administered by the card issuer.

Payment histories on unsecured credit cards are watched by three different credit bureaus. Secured credit cards are not always monitored in this way or even report their payment histories. The policies on these types of cards will depend upon the individual credit card issuer.

Another advantage of secured loans is that they can help you raise your credit score. To take advantage of this benefit, you must choose a card that has its payment history reported to credit bureaus. The benefits of taking this step are typically outlined in a card's application form. ...
... If you cannot find such a provision, then you may need to contact the card issuer's customer service department by phone or email to learn more.

Raising your credit score is an easy matter. By using the secured credit card to buy whatever it is, and making payments on time. Secured credit cards are different from other cards. For instance, default payments are taken from the balance sitting in the savings account.

Getting approved for a secured credit card is fairly easy. Far less hassles involved than with other cards. There will be no required credit check since the saving account will be the source of collateral on the card. The only restrictions on getting approval for secured credit cards involve age and US residency; you must be 18 or older and living in the United States.

A secured credit card's limit is based entirely on the money deposited in the required savings account. Limits are also determined by this amount so you can raise the limit by adding more money. Cash deposited will earn a certain amount of interest unless you make a default on repayment. This factor may be one of the biggest advantages of having a secured credit card. Of course, you might also count the fact that these secured cards can help you avoid credit card debt since you cannot spend any more than what you have in your saving account.

With so many people with no credit or bad credit, secured credit cards can be a viable alternative. Used regularly and paid off promptly, these cards can be an excellent tool for building your credit score. With time, more options will be opened to you, as a borrower.
Alisdair Cosgrove has been writing finance articles for many years and can find more of his work at the UK site CreditCardsWeb.co.uk, offering credit cards for UK residents and also a great selection of 0% credit cards.